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Cuban Trademark Crisis Brewing.

ALEXANDRIA - August 21, 2006 -- Some fear the recent U.S. refusal to renew the Havana Club rum trademark claimed by a Cuban joint venture and Bacardi's launch of Havana Club has created an atmosphere of retaliation jeapordizing intermational relations with respect to honoring other nations' trademarks.

Rum distiller Bacardi and Cubaexport, a Cuban company that partnered with French liquor giant Pernod Ricard to sell rum on a global scale, are at the center a dispute over the trademark Havana Club. The dispute was brought to an even bigger international scale on August 3, 2006 when the U.S. Patent and Trademark Office (USPTO) said the Havana Club trademark held by Cubaexport would be cancelled even though Cubaexport filed its renewal application correctly with the correct fee on time.

The USPTO refusal to renew the registration has raised concerns that Cuba could retaliate by canceling U.S. trademark registrations based on the communist nation's own "policy" considerations.

Despite the long-standing U.S. embargo that precludes most trade with Cuba, more than 400 U.S. companies have registered in excess of 5,000 trademarks in Cuba. Until now, Cuba had no problem registering and renewing trademarks in the United States.

Cuba could cancel the trademarks for Levi's jeans or Heinz ketchup, for example, and sell the "Cuban" versions in local stores. Those products could then travel to other markets, harming U.S. companies that have long sought to keep counterfeits off store shelves in foreign counties, said the National Foreign Trade Council.

Bacardi has been freuding with Cuba for some time. Section 211 that was inserted in a 1998 budget bill is sometimes called the "Bacardi Bill" and has been criticized as a measure solely aimed at benefiting the liquer giant.

Cuba has threatened retaliation in connection with trademarks before. In 2001, Fidel Castro said he gave instructions to the Cuban rum industry to begin producing run under the label Bacardi. Castro also threatened that other U.S. brand names could be in jeopardy. "Here we can produce Palmolive, any toothpaste," said Castro. There's no evidence that Castro followed through with these threats, except Cuba did briefly produce its own Bacardi rum after the revolution from Batista's rule in 1959.

Among the U.S. companies registered in Cuba are: Playboy, Bud, Huggies, Home Depot, Pizza Hut, Kmart, McDonald's, Tommy Hilfiger, Old Spice, Hawaiian Tropic, Starbucks, Healthy Choice, Radisson, Visa, Ace Hardware and United Airlines.

If the situation takes a turn for the worse, U.S. companies could be forces to spend millions defending trademarks in many different countries and make the Cuban market ever more difficult to enter if it transitions from communism to a market economy. Some industry and polical experts think a Cuban free market ecomony may be realized sooner rather than later because of Castro's declining health.

Apparently, the Arechabala familywho owned the U.S. trademark for Havana Club allowed the registration to lapse in 1973. Then in 1976, the Cuban government jumped in and registered the U.S. trademark for the famous brand. Bacardi paid the Arechabalas for the right to Havana Club in 1997 and has been disputing with Cunas ever since regarding ownership of the mark. For the time being, there are two Havana Clubs -- one distilled in Puerto Rico by Bacardi and sold in the United States and another made in Cuba and distributed internationally.

Adding to the air of anamosity is the fact that Cuba lost a high-profile U.S. trademark case in February. Cubatabaco, a Cuban government-owned tobacco company, argued that the brand Cohibia was sufficiently famous that New York-based General Cigar shouldn't be allowed to use it.even though Cubatobaco had not registered the trademark in the United States. The U.S. Court of Appeals for the Second Circuit rejected Cubatobaco's argument, reasoning that Cubatabaco couldn't acquire such publicity rights while the economic embargo was in effect. The situation with the Cohibia brand is similar to the situation with the Hanava Club brand. One Cohibia cigar is made in Cuba by Cubtatobaco and the other Cohibia made in the Dominican Republic by General Cigar.